Broadcasting Telecasting (Oct-Dec 1957)

BROADCASTING TELECASTING Vol. 53, No. 15 OCTOBER 7, 1957 BARROW REPORT URGES TOUGH CURBS • Says network option time, must-buys, spot sales must go • Wants FCC to regulate networks, cut back station holdings • Sees antitrust violations in network-station rate-making The special FCC Network Study Staff last week delivered a massive indictment against alleged concentrations of economic power in television and urged adoption of new and tougher government controls over tv networks and tv station ownership. The staff, which has spent two years and $221,000 investigating tv networking, issued a 1,485-page report. Its recommendations, if adopted, would: • Place networks under direct regulation by the FCC. • Outlaw option time. • Outlaw must-buy station lineups. • Prevent networks from acting as national spot representatives for stations other than those they own. • Impose controls over rate-making to prevent networks from influencing a station in setting its spot rate or from persuading a station to clear network programs on the promise of improving its network rate. • Tighten multiple ownership rules to forbid any licensee from owning more than three vhfs in the top 25 markets (although retaining the present maximum ownership of five vhfs and two uhfs) and to attach more importance to local identity and diversity of ownership in awarding station grants. • Require all station sales to be conducted for cash so that applicants other than the proposed buyer could offer comparable bids and be admitted to a comparative hearing. (Repeal of the MacFarland Amendment to the Communications Act, which now prevents outside bidders from intervening in station transfers, would be a necessary preliminary.) • Require networks to make public all affiliation agreements and proposals for affiliation or disaffiliation. • Make public all compensation provisions in all affiliation contracts. • Give the FCC power to levy fines against stations for infractions of its rules. • Require networks to place programs on non-affiliates, if desired by the sponsors and if affiliates fail to clear. • Make networks place programs on stations in markets served by affiliates in other markets,, if sponsors want exposure in the overshadowed markets. Broadcasting • Telecasting The staff report — which has been nicknamed the "Barrow report" after the study director, Roscoe L. Barrow, dean of the U. of Cincinnati Law School — also charged there was evidence of antitrust law violations in some network practices. Option time arrangements between networks and their affiliates, the report said, bear a strong resemblance to the "blockbooking" practices outlawed in the movie industry in the Paramount case. In that case a consent decree led to the severance of movie production and exhibition. An antitrust analysis of option time, the report said, "indicates at least a strong possibility that it would be found to be a per se violation of Sec. 1 of the Sherman Act." The study staff also said it had found evidence of antitrust violations in network rate-making practices — urging that the evidence be given to the Justice Dept. The report pointed out that the FCC's Chain Broadcasting Rules prohibit a station from entering any agreement with a network that hindered the station from fixing or changing its non-network rates. "All networks have engaged in practices which are contrary to the broad purpose of this rule," the report said. "In the case of CBS and ABC," the report alleged, "evidence exists that the networks have used their power to fix network rates in order to influence the level of the stations' national spot rates in a manner which raises a question with respect to violations of the Chain Broadcasting Rules, and possibly also of the antitrust laws. "In addition. NBC and CBS have ad IF TAXPAYERS can count value in weights and measures, they got their money's worth in the $221,000 Barrow report. The statistics: 1,327 pages of text (roughly 400,000 -words) in two volumes, 15 chapters, 158 pages of appendix, 7V4 pounds, four inches thick. The sheer bulk of the duplicating project kept 20 FCC mimeograph operators busy -for 581 man hours, most in the last 10 days. October 7, 1957 • Page 31